Petra Diamonds Posts 1H Loss – Expects Stable Market in 2012

Petra Diamonds posted a net loss of $26.7 million during the fiscal half year that ended on December 31, 2011 compared with a profit of $24.5 million one year earlier as unrealized foreign exchange charges offset an increase in revenues and production. The company expects higher sales in the current half year as production from its newly acquired Finsch mine (pictured) comes on line.
”The second half of our 2012 financial year will see significantly higher production and sales, set against a more stable diamond market,” said Johan Dippenaar, Petra’s chief executive.

Finsch MineHigher sales are expected due to Petra holding larger than normal inventory at the end of December as sales fell below expectations due to the weakening of diamond prices between July and December. The company had diamond inventory worth $38.1 million on December 31, compared with $20.1 million a year earlier. As a result of the extra stock and production from Finsch Petra will hold five tenders in the second fiscal half year, rather than three previously held.

The first of those, held in early February, saw the sale of 306,149 carats realize $44.4 million, or an estimated $145 per carat. The company reported a slight strengthening of prices early in its second fiscal half and expects that the stabilization trend will continue for the remainder of the fiscal year.

Feedback from the company’s client base is generally positive concerning current global demand for rough diamonds, according to Petra’s spokesperson. Even with uncertainty continuing in the first half of 2012, there is an expectation that demand will pick up in the second half of this year.

Petra previously reported that revenues rose 13 percent year on year to $101.4 million during the first fiscal half. The company closed its acquisition of the Finsch mine from De Beers in September helping boost total production by 64 percent to 953,553 carats for the period.

Petra is focused on mining in South Africa and owns controlling shares in the Cullinan mine, Finsch, Koffiefontein, Kimberley Underground, and three fissure mines in the country, as well as the Williamson mine in Tanzania. The company said it is on track to achieve output of 2 million carats in fiscal 2012.

Petra shares fell by 1.3 percent to 152 pence in early Tuesday morning trade on the London Stock Exchange (LSE). The company upgraded to London’s main market in December and is expecting to enter the FTSE 250 index in March 2012.

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